Facebook is still fighting a $500 million lawsuit over the fate of its virtual reality business

Oculus cofounder Palmer Luckey helped sell his VR startup to Facebook in 2014. He abruptly left the company in late March. AP Photo/Eric Risberg

Facebook is still fighting a $500 million lawsuit that seeks to ban sales of its Oculus Rift virtual reality headset.

Facebook was ordered by a jury in February to pay game maker ZeniMax damages for a violated NDA signed by Oculus co-founder Palmer Luckey, copyright infringement, and multiple counts of false designation.

Now Facebook will argue its case for a retrial during a scheduled hearing in Dallas court on Tuesday, according to court documents seen by Business Insider.

ZeniMax, the holding company behind popular games like "Doom" and "Fallout," is seeking a permanent injunction against sales of the Oculus Rift headset, which it claims is partly based on its stolen technology. If an injunction isn't granted, ZeniMax wants to be paid a royalty fee of at least 20% for the next 10 years of Oculus sales.

Facebook is seeking to significantly lower the damages it's forced to pay ZeniMax. In a June 15 court filing, lawyers for Facebook argued that "a $50 million award would be more than generous." Facebook is also refuting ZeniMax's request for either an injunction or royalty fee.

Representatives for ZeniMax and Facebook didn't respond to requests for additional comment on Tuesday's hearing.

Facebook purchased Oculus VR for $2 billion in 2014 and agreed to pay $1 billion more in employee stock and performance awards. Facebook CEO Mark Zuckerberg has said the company plans to spend billions more on developing virtual reality over the next several years, even as early sales for VR hardware have been low.